American enforces its addendum

Mark Pestronk

Q: I understand that American Airlines has sued a consolidator, GTT Travel, for various violations it said were committed by GTT and its “subagents.” I take the term “subagents” to mean retail agencies that buy consolidator tickets. Would our agency’s independent contractors also be considered “subagents”? What lessons does the suit have for advisors?

A: The suit, which was reported in Travel Weekly’s sister publication, The Beat, has multiple claims against GTT arising under American’s standard Addendum to Governing Travel Agency Agreements, which is the airline’s supplement to the ARC agreement, and the GTT Incentive Agreement, which sounds like a commission, override or discount agreement. The airline also has claims for conspiracy to commit fraud and breach of fiduciary duty.

Several of the subagents’ violations appear to be fraudulent, such as tricking consumers who wish to contact American directly into calling the subagent’s number instead. However, some of the subagents’ activities are standard in the industry but violate the American addendum, including marking up airfares and adding fees to tickets while not separately listing the markup or fee.

The carrier relies chiefly on the addendum, which states: “To the extent that subagents … or other third-party contractors or representatives including subagents … are involved in Agent’s activities within the scope of the Appointment, Agent will remain primarily responsible and liable to American for their full compliance with all of Agent’s obligations under the Agreement.”

“Subagent” is not defined, but it clearly means any agency that buys tickets from or through a host agency or consolidator, and it also apparently means ICs of host agencies. The lawsuit puts it this way: “GTT is obligated to ensure its subagents act within the legal and ethical requirements set forth by American.”

More on AA’s new addendum:

  • Nasty surprises in AA’s addendum
  • Diving deeper into AA’s addendum

American would impose many new duties on consolidators and hosts. It states, “GTT is breaching its contract with and duties to American in several ways. These include but are not limited to: failing to train subagents; failing to monitor its subagents’ behaviors … .”

The airline also blames GTT for having an inadequate sign-up contract for subagents. “The Subagent Contract is only 1-2 pages in length, does not require the subagent to acknowledge any provision of the [American addendum] and does not include any language regarding ethics, fraud prevention or data security.”

Further, American even blames GTT for not providing the subagents with a copy of the addendum. The trouble is that the addendum is 9,000 words long, and it is not feasible for every subagent to know everything that it prohibits.

Such training, monitoring, special contracting and provision of copies are not standard in either the consolidator or host agency industries. Imposing such new duties is infeasible and unfair, but every consolidator and host needs to be aware that these are American Airlines’ positions.

One reasonable reaction to this lawsuit would be to stop selling American tickets through subagents. Otherwise, it would be a good practice to digest the addendum into a list of “don’ts” that would be easily understandable by nonappointed agencies and hosted ICs.  

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